Brett Wright

A recent report released by life insurance specialist Brett Wright, has shed some light on the life insurance commission debate, from an advice practitioner and consumer point of view.

The report breaks down the “Getting Covered” component of the consumer-adviser relationship and advice process, whilst also digging into the review and renewal of life insurance, claims and how the relationship between consumers and advisers works from a real world perspective.

In his report, under the “Reviewing & Renewing” section, Wright explains, “Commission/brokerage covers the cost of any market reviews and policy adjustments, whilst encouraging the client to review the ongoing appropriateness of their cover and reconfirm the value and need for it, without the fear of incurring advice and service fees on top of stepped premium rate increases at each renewal, as the client gets older.”

Versus the experience of Fee for Service (FFS), where, “Using Fee For Service, advisers will need to charge consumers between $600-$1,500 each year to do these reviews and make any adjustments, plus consumers will also need to cover any increase in premiums from the insurer too (not uncommon in today’s market for a stepped premium to increase 10-25% per year).”

When it comes to making claims, Wright points out, “When consumers need to claim, advisers are there to organise all of the forms, work with their doctors and manage their insurers, so they and their family can focus on recovering, without the stress of back and forth with insurers and lawyers.” and he also explains the huge amount of advocacy work advisers do on behalf of their clients, to maintain integrity and trust in the system at the most important time for a client, which is often whilst consumers are at their most vulnerable, after after being dealt the physical, mental and financial blows associated with losing the ability to work, or a loved one passing away.

The report also mentions how the increasing complexity of income protection claims in particular, can unfairly blow costs out for claimants, with each monthly claim submission (which will continue to become more and more complex after APRA’s intervention).

Read the report

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Wright’s report has been supported by key industry leaders such as John de Zwart CEO NEOS Life, Michael Pillemer CEO PPS Mutual, Wayne Handley MD Bombora Advice, Helen Blackford CEO Lonsdale, Millennium3 & IOOF Alliances, Don Trapnell Director Synchron, Nettie Handley Life Insurance Advice Advocate and Ben Donald Adviser and Director Austbrokers Financial Solutions.

The post Consumers reviewing, renewing and claiming on their policies appeared first on AdviserVoice.

Brett Wright

A recent report released by life insurance specialist Brett Wright, has shed some light on the life insurance commission debate, from an advice practitioner and consumer point of view.

In his report, Wright articulates the value advisers deliver when providing life risk advice, how consumers fair in a commission vs. no commission world, why an advised life insurance consumer is better off and why 90-95% of people would not be willing and/or able to access life insurance advice and better value advised policies, if commissions were banned.

Wright commented, “With the government, opposition and regulators continuing to say they may support a ban of commissions, I wrote this report with the sole purpose of starting open, honest, transparent and fact based conversations with politicians, regulators, life insurers, associations, licensees, advisers at the coal face, and most important of all, the consumers we serve.

I think most advisers understand the government wants change, and most of us want change too. However, the changes need to be well informed, financially viable and drive simplification and innovation in the sector, so the industry can provide a faster, fairer and better experience for all Australians, instead of adding more and more red tape, suffocation and increased costs for all.

The report is not trying to argue life insurance advice should be solely funded by commissions. I believe there is room for fee for service (FFS) and the consumers who want and/or can afford FFS, can access this option already. But FFS should not be the only option and it is essential consumers maintain their right to choose between the commission and FFS models, and decide which is best for them.

I’m totally frustrated with the lack of direction in life insurance and advice, and it is safe to say that most advisers and their clients are at their wits end too. Working closely with my own clients and also seeing how other advice businesses (large and small) help their clients every day, I still can’t fathom how or why we are still sitting here questioning the value of life insurance advice and commissions, when advised clients who fund their advice through commission, generally have access to better benefits, better premiums, better claims services and have cover that is fit for purpose, when compared with outcomes if they tried to DIY.”

The life insurance sector is at a critical point in time. The main goal and focus for all stakeholders, needs to be ensuring life insurance advice remains accessible and affordable to consumers, and remains profitable for advisers – without these two things, advised life insurance dies and a collapse of life risk pools will follow.

Wright’s report has been supported by key industry leaders such as John de Zwart CEO NEOS Life, Michael Pillemer CEO PPS Mutual, Wayne Handley MD Bombora Advice, Helen Blackford CEO Lonsdale, Millennium3 & IOOF Alliances, Don Trapnell Director Synchron, Nettie Handley Life Insurance Advice Advocate and Ben Donald Adviser and Director Austbrokers Financial Solutions.

Read the report.

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